You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services.
Volatility has been the name of the game lately in the stock market.
No one knows for sure, of course, but there are signs a market correction or crash could be on the horizon.
Chuck Saletta : In the event of a market crash, one company whose shares I already own that I would buy more of is insurance giant Prudential Financial.
It backs that focus up with a conservatively managed balance sheet that has around $400 billion worth of bonds and cash as assets, and a debt-to-equity ratio below 0.6.
If the next market crash knocks its stock down to a substantially cheaper price, Prudential Financial just might be worth buying hand over fist.
While full-service securities brokerages like Schwab are no longer as dependent on revenue from trading as they once were, trading remains an important part of their business.
This illustrates an important point about Schwab: Over the years, it has grown into a muscular, multifaceted financial-services company with numerous revenue streams based on core financial services.
This covers items such as margin lending, bank loans, and a clutch of other services that are essential in any modern economy.
During the financial crisis of the late 2000s, the company actually managed to increase its revenue during the hard years of 2008 and 2009.
Since the crisis, margins have generally been creeping up steadily as the company successfully exploits economies of scale and becomes more efficient.
No matter the state of the stock market, investors are always going to trade, and people are always going to need some form of financial services.
The company has been under intense scrutiny lately for its alleged negative impact on teens, and its use by human traffickers and armed groups to conduct their businesses.
But for many investors, it’s not always about whether they like or dislike a company; it’s about how much money it generates and what its growth prospects are.
In its latest third-quarter report, Meta’s revenue increased 35% year over year increased to $25.9 billion, up from $13.8 billion in the year-ago period.
But the icing on this cake is that all the negative publicity has dropped Meta’s share price, and it’s now trading for a mere 22 times earnings.
My portfolio already has had a love affair with Meta Platforms. The company went public back in May 2012 at a price of $38.
However, when it dropped three months later to around $19, I scooped up 100 shares and promised myself that no matter what, I was going to experiment by testing out my buy-and-hold theory and never selling Facebook, no matter what.
I don’t expect Meta Platforms to give me that same kind of return going forward, but I still see great possibilities as the company moves into the metaverse.